Summer Gas Prices

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"Last year's epic oil prices of more than $4 should have pushed people toward natural gas."

Americans are focusing on gas prices and crossing their fingers that they'll be able to make that cross country trip without pulling an "Oregon Trail" routine and selling off their possessions along the way. As this is going on, investment advisers and traders are looking at natural gas prices and where those are headed in the next few months. Last year's epic oil prices of more than $4 should have pushed people toward natural gas. When oil gets expensive, natural gas becomes the commodity of choice. But natural gas hasn't taken off the way most investment advisers thought it would.

The average gas price now is $2.46, according to AAA's daily fuel gauge report. That number is down from $2.69, the average gas price last month. And last year, the average gas price was $4.08. With oil seemingly cheap right now, at least in comparison to last year, natural gas usage has been surprisingly low so far this year.

"I'm surprised that natural gas is priced where it's at. I anticipated there would be a better market for it with the green movement," says Darrell Jobman, senior analyst at TraderPlanet.com.

Several investment advisers are expecting people to turn to natural gas more in the next few months because of the hurricane season and as we head toward winter when natural gas heats many homes. Natural gas is trading at about $3.41 per thousand cubic feet, down from last summer's high of $13.69.

Matt Cacciotti, president of MMC Trading, doesn't anticipate oil going above $75 or below $55 a barrel. It's at $66 a barrel now. Oil could rally if the dollar falls though, Cacciotti says.

Despite commodities being a market that's tricky to get into, investment advisers still encourage investors to have some commodities exposure. "Most individual investors should have some portion of their portfolio between zero and 10% allocated to commodities as a hedge against inflation," explains Gerard Klingman, president of Klingman & Associates. He adds that it is not recommended that investors select or trade commodities on their own.

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